Cabinet gives nod to extend preferential interest for SDAs

• Proposal by PM to allow income to be credited to local accounts approved by Cabinet 
• New changes to be made under Foreign Exchange Act, will be presented to P’ment for approval  

Cabinet has approved a proposal to extend the preferential interest rates for Special Deposit Accounts (SDAs) introduced by the Government to attract foreign exchange and to permit the transfer of their income to local bank accounts.   

Approval of the Cabinet of Ministers was granted at the meeting held on 8 April for the issuance of orders under the Foreign Exchange Act No. L2 of 2017, for the opening and maintenance of contemporary deposit accounts named 'Special Deposit Accounts,' in order to deposit money remitted into the country across the banking system for a period of six months, with the objective of encouraging the influx of foreign exchange into the country. 

Accordingly, the valid time of the orders issued is scheduled to end on 7 October and therefore, a fresh set of recommendations has been furnished by the Financial Board of the Central Bank of Sri Lanka to enable the foreign exchange remitted to Sri Lanka to be retained within the country for a further period, Cabinet Spokesman and Media Minister Keheliya Rambukwella said. 

“Payment of interest rates applicable for the SDAs will continue if they are renewed and maintained after maturity, and permission will be given to transfer the income generated at the maturity of the Special Deposit Accounts to respective accounts within Sri Lanka,” he added.  

The income from the SDAs at maturity if they are held by organisations such as Non-Government Organisations or guarantor companies are ineligible for opening foreign currency accounts although residing within Sri Lanka. Therefore provisions will be made to enable the income to be credited to a rupee account on the basis of non-remittance in the future.

Accordingly, the Cabinet of Ministers approved the proposal submitted by Prime Minister Mahinda Rajapaksa in his capacity as the Finance Minister to declare new orders under the Foreign Exchange Act in addition to the orders published in the gazette notifications No. 2170/4 of 08.04.2020 and No. 2182/32 of 1 July 2020 in regard to SDAs. These orders will be submitted to Parliament for approval.